AAT adds its support for new small business deposit scheme

30-May-2018

AAT (Association of Accounting Technicians) has
become the first accounting body to support a cross-party, multi-business
campaign for the introduction of a retentions deposit scheme for small
businesses.

The new scheme will put an end to the practice
of payments being withheld for an unreasonable length of time and eliminate the
risk of losing retentions through contractor bankruptcy.

The campaign has been kick-started by
Conservative MP Peter Aldous who introduced a Private Members Bill to protect
retention deposits in connection with construction contracts. This bill, due to
be read a second time in Parliament on 15 June 2018, has already secured the
support of over 150 MPs from the Conservative, SNP, Plaid Cymru, DUP, Green,
Liberal Democrat and Labour parties.

AAT is the 80th organisation to confirm its
support for the bill, meaning businesses and self-employed professionals
totalling more than 500,000 are now represented in total. Other supporters
include the Federation of Small Businesses, Institute of Directors and British
Chambers of Commerce.

Retentions are money which is retained – often
as much as 10% – from the SME completing construction work. It is withheld as a
security in case the SME fails to rectify any future defects but in reality is
often used by the larger company to boost their working capital. Ordinarily the
money should be returned within a 12 month period, but it can often take two or
three years and there are recorded cases of monies not being returned for over
a decade. The FSB has written to all FTSE 100 companies this week asking them
to tackle the practice of late payments.

Over 60% of AAT’s 140,000 members are employed
by, or own their own, SME. In addition, AAT’s 4,250 licensed accountants provide
accountancy and business advisory services to over 400,000 British businesses,
the majority of whom are also SMEs, many of whom have been stung by the payment
practices of many larger organisations.

Peter Aldous MP said:

“To have a body from the finance and accounting
world on board with the campaign is a great development. It helps confirm the
economic value that Retention Deposit Schemes would have, the day-to-day
benefit it would lead to for thousands of small businesses and the clear industry
appetite for reform.

“AAT represent a very diverse range of
financial experts, from blue-chip corporate giants and public-sector
institutions to micro-businesses and everything in between. I am very pleased
to welcome them as the 80th organisation to back my bill.”

Mark Farrar, AAT chief executive said:

“AAT is very pleased to support this much
needed and long overdue campaign. Retentions in the construction industry can
seriously impact on the productivity of SMEs and in some cases their viability.
They also serve to increase the overall cost of construction.

“Billions of pounds of SME cash is currently
tied up in retentions that are being held for unreasonable amounts of time.
That is money which could be better put to use helping SMEs survive, grow and
succeed.

“AAT therefore supports moves to ensure
retentions are placed in a government backed scheme, similar to the way
shorthold tenancy deposits are currently saved.”